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Full Year Results Presentation Year to 30 June 2018 04 September - PowerPoint PPT Presentation

Full Year Results Presentation Year to 30 June 2018 04 September 2018 Agenda C hairman s Overview Steve Morgan Financial Results Barbara Richmond Review of Operations John Tutte Summary and Outlook Steve Morgan 2 FULL YEAR RESULTS


  1. Full Year Results Presentation Year to 30 June 2018 04 September 2018

  2. Agenda C hairman’ s Overview Steve Morgan Financial Results Barbara Richmond Review of Operations John Tutte Summary and Outlook Steve Morgan 2 FULL YEAR RESULTS PRESENTATION

  3. A fifth consecutive year of record results • Record pre-tax profits of £380m up 21% • Record legal completions at 5,913 (incl. JV) up 9% on 2017 • Turnover £1.92bn up 16% • ROCE up from 26.0% to 28.5% • Net cash of £63m at year end (June 2017 Net debt: £73m) 3 FULL YEAR RESULTS PRESENTATION

  4. Financial Results Barbara Richmond – Group Finance Director

  5. Financial Highlights • Homes turnover up 15% to £1.9bn • Operating margin 19.9% (2017: 19.4%) • EPS up 22% to 85.3p • Cash conversion of 72% (2017: 58%) • Final dividend of 19p, up 73% (2017: 11p) • ROE 28.0% (2017: 27.7%) 5 FULL YEAR RESULTS PRESENTATION

  6. Income Statement F FY FY Variance £m 2018 2018 2017 £m % Turnover - Homes 1,900 1,648 252 15 Turnover - Other 20 20 12 8 67 Total Turnover 1,920 1,660 260 16 Gross profit 469 469 405 64 16 Operating expenses (87) (83) (4) (5) Operating profit 382 382 322 60 19 Share of joint venture profits 5 5 1 4 - Interest (7) (8) 1 13 Profit before tax 380 380 315 65 21 6 FULL YEAR RESULTS PRESENTATION

  7. Analysis of private plots in Cost of Sales FY FY 2018 2017 Average plot cost eliminated (£k) 81 75 Average plot cost as percentage of ASP 21 21 • Continued discipline on land buying 7 FULL YEAR RESULTS PRESENTATION

  8. Turnover by Geography • Stronger H2 performance in the Northern region • 24% growth in the Central region • 36% growth in London with first legal completions at Colindale FY 2018 FY 2017 £m £m % % £m % North 433 433 23 23 461 28 Central 445 445 23 23 360 21 South 726 726 38 38 609 37 Greater London 296 296 15 15 218 13 Total Homes 1,900 99 99 1,648 99 Other 20 20 1 1 12 1 1,920 100 100 1,660 100 Total 8 FULL YEAR RESULTS PRESENTATION

  9. Homes Turnover Analysis • Record Homes revenue of £1.9bn, up 15% • Legal completions up 9% to 5,913 including JV • Private ASP up 7% to £380,200 • Apartments 22% of private sales revenue (2017: 19%) • Social revenue 7.6% of turnover (2017: 7%) and 19% of volume (2017: 19%) Turnover (£m) Volume ASP (£k) FY 18 FY 17 Var % Var FY 18 FY 17 Var % Var FY 18 FY 17 Var % Var Private Houses 1,365 1,248 117 9 3,631 3,627 4 - 375.9 344.1 31.8 9 Private Apartments 390 390 285 105 37 985 985 678 307 45 395.9 420.4 (24.5) (6) Total Private 1,755 1,533 222 14 4,616 4,305 311 7 380.2 356.1 24.1 7 Social 145 145 115 30 26 1,102 1,014 88 9 131.6 113.4 18.2 16 Total Homes 1,900 1,648 252 15 5,718 5,319 399 8 332.3 309.8 22.5 7 9 FULL YEAR RESULTS PRESENTATION

  10. Private Turnover Analysis • Homes private turnover up 14% to £1.8bn • Private volumes including JV up 9% to 4,811 • Heritage Collection 72% of turnover (2017: 75%) • Bespoke product 28% of turnover (2017: 25%) • Help to Buy legal completions of 1,850 (2017: 1,717) • ASP higher due to geographical and product mix Turnover (£m) Volume ASP (£k) FY 18 FY 17 Var % Var FY 18 FY 17 Var % Var FY 18 FY 17 Var % Var Heritage 1,258 1,151 107 9 3,399 3,352 47 1 370.1 343.4 26.7 8 Bespoke 497 497 382 115 30 1,217 953 264 28 408.4 400.8 7.6 2 Total 1,755 1,533 222 14 4,616 4,305 311 7 380.2 356.1 24.1 7 10 FULL YEAR RESULTS PRESENTATION

  11. Cash Flow FY FY FY FY FY FY FY Operating cash flow 2018 2018 2017 Net debt movement 2018 2018 2017 £m £m £m £m £m £m EBITDA 385 385 324 Operating cash flow 276 276 189 (Increase) in land (127) (41) Net movement in JV's 26 26 (1) Movement in land creditors 36 36 (27) Interest (4) (5) Net (investment) in land (91) (68) Tax (74) (56) Dividend (74) (44) Movement in WIP (40) (88) Other (14) (17) Net cash flow 136 136 66 Movement in NRV (8) (11) Other working capital movements 30 30 32 Opening net debt (73) (139) Operating cash flow 276 276 189 Closing net cash/(debt) 63 63 (73) Cash conversion 72% 72% 58% Average net cash/(debt) 22 22 (67) 11 FULL YEAR RESULTS PRESENTATION

  12. Net Assets £m June 18 June 17 Movement Land 1,439 1,312 127 WIP 779 779 739 40 NRV Provision - - (8) 8 Land creditors (387) (351) (36) Net investment in inventory 1,831 1,692 139 Other working capital (399) (395) (4) Tax (35) (34) (1) Fixed Assets 17 17 18 (1) Investment in JV 6 6 27 (21) Capital Employed 1,420 1,308 112 Net cash/(debt) 63 63 (73) 136 Net Assets 1,483 1,235 248 12 FULL YEAR RESULTS PRESENTATION

  13. Plot Cost Carried Forward 80 25% 70 20% 60 50 15% Owned £k 40 Owned & Contracted 10% 30 Owned and contracted plot cost as % of private ASP in year 20 5% 10 0 0% 2015 2016 2017 2018 13 FULL YEAR RESULTS PRESENTATION

  14. Review of Operations John Tutte – Group Chief Executive

  15. Continued growth and expansion PBT (£m) Revenue (£bn) 450 2.0 400 1.8 350 1.6 4 Year Growth Record 300 1.4 • Turnover +122% 250 1.2 200 1.0 • Profit before Tax +186% 150 0.8 100 0.6 50 0.4 2014 2015 2016 2017 2018 15 FULL YEAR RESULTS PRESENTATION

  16. Continued growth and expansion Divisions • 15 homes’ divisions • New division in Thames Valley • Greater London reorganised into East and West divisions Harrow Estates • Restructured to manage group-wide forward land activities 16 FULL YEAR RESULTS PRESENTATION

  17. Continued growth and expansion Regions • First full year contribution from East Midlands • Strong growth in Central and South regions • Good demand across all regions Greater London • 186 apartments sold to M&G for PRS at Colindale Gardens • Planning application at Alton Estate, Roehampton for c.1,100 homes to be submitted in October • Stable market in outer boroughs 17 FULL YEAR RESULTS PRESENTATION

  18. Investing in places Highlights • Land market remains attractive • 7,455 plots with planning acquired • 2,727 plots pulled-through from forward land holdings • Larger sites acquired: c.180 plots • Relieve pressure on replacement • Allow broader range of product to be plotted • More scope to create great places Barrington Cement Works, Cambridge 18 FULL YEAR RESULTS PRESENTATION

  19. Investing in places Movement in Current Land Holdings Plots Contracted Total owned plots At 1 July 2017 23,980 2,120 26,100 Legal completions (5,718) - (5,718) Market additions 3,493 1,235 4,728 Forward land pull through 2,627 100 2,727 Transfers 1,458 (1,458) - Other (land sales and replans) (40) (167) (207) At 30 June 2018 25,800 1,830 27,630 19 FULL YEAR RESULTS PRESENTATION

  20. Investing in places Movement in Forward Land Holdings Total Plots At 1 July 2017 26,400 Additions 8,484 Transfers to current land (2,727) Strategic review (1,457) At 30 June 2018 30,700 Analysis Jun 18 Jun 17 Land owned without planning 2,973 2,820 Land contracted without planning 2,722 1,357 Options − allocations 12,257 11,614 − realistic prospect 12,748 10,609 30,700 26,400 20 FULL YEAR RESULTS PRESENTATION

  21. Investing in places Land Holdings by Geography June 18 June 17 Current Forward Current Forward % % % % Land Land Land Land North 5,331 19 19 12,805 42 42 5,382 21 12,407 47 Central 7,848 28 28 5,907 19 19 6,483 25 6,041 23 South 10,356 38 38 10,131 33 33 9,963 38 7,845 30 Greater London 4,095 15 15 1,857 6 4,272 16 107 ─ 27,630 100 100 30,700 100 100 26,100 100 26,400 100 Combined GDV c. £20bn 21 FULL YEAR RESULTS PRESENTATION

  22. Operational Highlights • Great homes: great places • Product • Placemaking • Health and well-being • Nature for People • Community infrastructure 22 FULL YEAR RESULTS PRESENTATION

  23. Operational Highlights • c.100 new jobs created • c. 2,300 directly employed • 95% proud to work for Redrow • 15% workforce trainees • Top 100 Apprenticeship Employer for 5 th consecutive year 23 FULL YEAR RESULTS PRESENTATION

  24. Operational Highlights • Restructured Health, Safety and Environmental Management teams • NextGeneration Gold standard • Investing in quality control • Customer recommendation 89.1% • Off-site manufacture • Build cost increases c.4% 24 FULL YEAR RESULTS PRESENTATION

  25. The Market and Outlook Sales Market 2018 2018 2018 2017 FY Value of private reservations * £1,730 £1,562 Private reservations per outlet per week * 0.70 0.67 Closing private order book (excl. JV) £890m £890m £915m Closing total order book (excl. JV) ** £1,144m £1,030m Cancellation rate 15% 15% 15% * Figures are 52 weeks LFL ** Includes Social • Sales rate excluding PRS 0.67 (2017: 0.67) • Total order book up 11% • Cancellation rate unchanged 25 FULL YEAR RESULTS PRESENTATION

  26. The Market and Outlook Outlets 2017 Actual 2018 Actual 2019 Forecast Average outlets 124 124 130 • Openings in line with forecast • Closures higher than forecast due to better than expected sales rates 26 FULL YEAR RESULTS PRESENTATION

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